How To Determine Whether To Rent Or Buy A Home (via NYT)


How To Determine Whether To Rent Or Buy A Home (via NYT)
By Scott Rogers • May 31, 2024
Buying a home is expensive these days, given high sales prices and high more interest rates -- but renting a home can be quite expensive as well! How can you best compare the financial impact of buying vs. renting? The New York Times has created a very helpful, interactive calculator that lets you dive into the details to better understand whether it will make sense for you to buy or rent based on the particular details of your situation. You'll start with some basic inputs including: Home Price, if You Buy Monthly Rent, if You Rent How Long Do You Plan to Stay? It is important to then adjust a few additional assumptions they have built into their calculator to match your scenario. The main sliders that seem important to adjust are... the amount of your down payment tax rate (1.01% City of Harrisonburg, 0.68% Rockingham County) costs of selling home (can be rounded to 5.5%) maintenance/renovation (depends on age of home) extra monthly utilities (set to zero unless they are paid by your landlord) monthly common fees (homeowners association dues) The calculator will then show you your total costs of renting vs. buying over the timeframe you chose. In the fictional scenario I have illustrated above, it made more sense (barely) to buy over five years when comparing a $325K purchase to a $2100 rental rate. One final (important) note... the calculator assumes 3% growth in home prices. I don't necessarily recommend adjusting that to a higher percentage... BUT... over the past four years we have been seeing 10% growth in home prices each year. If we continue to see that type of home price growth it will almost always make sense to buy, regardless of your timeline. In summary... $325K purchase vs. $2100 rental rate over a 5 year horizon with 3% annual growth in home prices... it's better to buy, but barely. (If we see 5% growth in home prices per year for the next three years, it would be better to buy, even over that short three year timeframe) Explore the calculator and all of your possible scenarios here. Receive Updates by Email Recent Articles: Is There A Price You WOULD Pay For This House? There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 22, 2024 (unless otherwise noted).
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